It’s official—we’re at the top of the cattle inventory cycle.
USDA produced its mid-year Cattle inventory report last week. It showed us a lot of what we already knew. We have 103 million head of cattle, the same as last year. The beef cow herd was also unchanged at 34.4 million head.
We lost a lot of calves this year between the blizzards in winter and the flooding in the Central Plains. It’s been a tough time on a lot of guys. The inventory report showed some of those calf crop numbers were down about 100,000 head with 36.3 million head.
But the number to pay attention to is beef replacement heifers. That’s the one that determines herd growth.
Beef heifer retention this year was smaller than a year ago, down 300,000 head. Dairy replacement heifers were down 100,000 head as well. But, “other heifers” were up 400,000. Remember, these are over 500 lbs. and this means 400,000 more feeder heifers.
This could change if folks decide to keep heifers in the second half of this year. And boy, it’s going to be tempting for a lot of producers out there to keep more replacement heifers with all the feed around the country. This is probably one of the best grazing years ever. Grass conditions are remarkable.
Last Monday’s Crop Progress report shows pasture conditions this year are better than the past five years. Two-thirds of the country’s ranges are in “good” or “excellent” condition. And this is even down from the high back in June when it was over 70 percent.
Some of the best range conditions can be found in the Central Plains and the Intermountain West. Most of these states have grass conditions better than the nation’s average.
Weather conditions are getting better too. Some places are just starting to dry out a bit. Hay producers have had a tough time getting hay dried and bailed and stored. But things are looking good. The government weather guys say there’s no drought on the outlook through summer. It will be hotter than normal in the Intermountain West and Southwest, but it’s going to rain more too. But the rain outlooks look like things will get closer to normal. Hopefully we’ve seen the end of the floods.
But you know how government reports work—some are good, but some are bad and not always reliable. Some are as close as horseshoes and hand grenades.
USDA does a pretty good job tracking inventory numbers for the most part. But every now and then they go a little wild. Take the recent corn acreage report for instance. Market analysts were expecting to see 87 million acres planted after the miserable spring farmers had in the Midwest. Then USDA comes out with their highly anticipated report of 92 million acres, which was a shock to the market. Corn futures dropped 40 cents overnight. That gave the feeder cattle futures a boost but didn’t set the market.
The government should be a little tighter in their numbers, more precise in their predictions.
Still, you should never bet against USDA reports in the futures markets. If you bet against them, you’ll lose.
The market effect on cattle numbers is just starting to show. We’re in the heart of video season. Calf sales in the videos have been great. The next big ones coming are Superior’s Video Royale this week, Western’s in Little America starting Aug. 12, and Northern’s Early Fall Preview starting Aug. 19. This next round of videos could advance the cash feeder market even more.
We do have active price discovery at the videos and auction markets! Those auctions are saying buyers want these program calves. Calves that are enrolled in programs like NHTC, GAP, natural, and with vaccine programs are bringing better money. I was seeing prices swing as much as $50 within class for 4-weight steer calves based on quality. Known bloodlines, verification programs, and niche markets make all the difference.
Some folks have been down on the auctions this year. But buyers are still out there and they’re still buying. They’re just pickier today. But they are rewarding quality. Program cattle are bringing in as big a return on investment as we’ve ever seen. Putting the work into calves is paying off. — PETE CROW